On Thu, Nov 29, 2001 at 10:21:25AM -0600, Timothy J. Salo wrote:
> > Date: Thu, 29 Nov 2001 06:57:49 -0600
> > Subject: Re: [amsat-bb] AMSAT & Combined Federal Campaign
> > From: Jon Ogden <na9d@speakeasy.net>
> > [...]
> > If Amsat were to "sell" an Arrow antenna or Nova, etc., they would be making
> > money at it. Therefore, they'd no longer be "non-profit." The idea of the
> > item being a donation means that a person could give any amount of money in
> > exchange for the item. Yes, it could be taken advantage of (like someone
> > "giving" a dollar for an Arrow), but that's the risk one takes as
> > non-profit.
>
> I believe that the simple answer is "no".
>
> An easy counter-example is the ARRL. The ARRL, a not-for-profit,
> tax exempt organization, sells stuff; they don't say "Send us a donation
> for the ARRL Handbook". TAPR, another not-for-profit organization,
> also appears to sell stuff.
>
> A not-for-profit organization is a corporation chartered under the
> not-for-profit section of a state law. (State laws generally provide
> for chartering regular corporations (for-profit corporations),
> not-for-profit corporations, and sometimes some other odds and ends.)
>
> State law places constraints on the activities of not-for-profit
> organizations. For example, not-for-profit organizations cannot
> pay dividends to their shareholders (never mind that, for example, REI
> calls their rebates "dividends"). That is, "not-for-profit" means
> "can't pay dividends to shareholders", not "can't sell items for more
> than they paid for them".
>
> Most (but not all) not-for-profit organizations also apply for
> exemption from Federal taxes, often under section 501(c)(3) of the IRS
> code. Most 501(c)(3) organizations also apply for exemption from
> state taxes (which I understand is routinely accepted at the state
> level). Tax exempt status imposes additional constraints on the
> organization's activities, such as a prohibition against lobbying.
>
> > Now, from what I understand, non-profits can actually make a profit (there
> > are stipulations though on what is done with those profits). That's why you
> > probably see some non-profits "selling" things. Perhaps AMSAT does not
> > distribute its profits correctly in order to "sell" and still be considered
> > non-profit.
>
> I believe that this procedure is an adaptation to state taxes. It
> does, in my limited experience, seem to be an unusual adaptation.
>
> > And then again, just because a non-profit organization "sells" something
> > does not mean they are using the proper terminology or even being legally
> > correct.
>
> I am not a lawyer, so I don't know what really constitutes a "sale".
> But, if anyone tries to donate $1.00 to the ARRL in return for an ARRL
> Handbook, please post your experiences.
TAPR (at least at the time its office was located in Arizona) was
required by Arizona law to collect sales tax on its sales to Arizona
residents. It was also required by Ohio law to collect sales tax on
sales at the Dayton Hamvention. I doubt that calling it a "donation"
rather than a sale would carry much weight with state authorities.
In addition to exemption of state and federal taxes for a non-profit
organization, true donations (to the extent that there is nothing of
material value received in return for the donation) may be
tax-deductable to the donor.
An additional benefit is that reduced postal rates are available in
certain instances to qualifying non-profit organizations. During my
tenure as an officer of TAPR, I went through the necessary hoops to
obtain the lower rates. I found it to be a more difficult procedure
than I had expected, but that's what happens when you are dealing with
government bureaucracies.
73, Bob
--
Bob Nielsen, N7XY nielsen@oz.net
Bainbridge Island, WA http://www.oz.net/~nielsen
IOTA NA-065, USI WA-028S
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